Customer Reviews

Competing in the Third Wave: The Ten Key Management Issues of the Information Age

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The two authors examine the top ten issues facing 'third wave' companies i.e. organisations of the information age and knowledge economy. In 'second wave' organisations (industrial economy), competitive advantage is built around efficient use of factors of production - land, labour, and capital. Third wave companies, on the other hand, compete firmly on the basis of knowledge deployment and the imaginative use of technology. According to the authors, 'second wave' managers and 'second wave' organisations (Editors note: and those teaching 'second wave' management principles and strategy) are at the crossroads. One road will lead to slow decline; the other to the prospect of long-term success. Achieving this success will require total organisational transformation in the areas of strategy; customer value; knowledge management; business organisation; market focus; management accounting; measurement and control; shareholder value; productivity and reward systems.

A good example of the main argument developed is in the area of customer value. 'Third wave' organisations are those who use information technology to understand the needs of customers and to match highly focused customer segments with their own core competencies thereby building long-term relationships. This emphasis on one-to-one relationships contrasts with the approach of 'second wave' companies who have an unbending faith in increasing scale and market share, despite a wealth of evidence showing that market share and net profits are not strongly correlated. While building market share has been the one of the primary driving forces of 'second wave' companies, 'third wave' managers will be more concerned with attracting the right customers; customers that represent a close strategic fit with the company or who have the potential to grow and therefore to be highly profitable. This has major implications for assessing company value. Traditional accounting statements show only results, but seldom tell how these results were achieved or how performance compares with competitors, and are a very poor guide to future performance because they give few clues to the changes in key processes and capabilities that determine business strength.

This book focus on one issue, how to stay alive and prosper in the new network based competitive environment. The authors look at this issue from ten different perspectives, and contrary to many other "overwiev" books, they come to a coherent conclusion from all standpoints.

This book doesn't have all the answers (nobody does), but it does a very good jobb of explaining why some old truths ain't true anymore and it does point out the general directions where you should look for the new truths for the new era.

/Rasmus Larsson, Internet Business Strategist at W O G N U M

One of the better books with thoughts on strategies and management concepts sustainable in the age of technological innovation and globalization. Certainly more substance than some of the .com and other e-commerce/customer-centric titles, with application across industries.

Generally speaking, this is an excellent book which brings to light the issues which face the business leaders of the information age. It does an excellent job of identifying the issues which must be addressed by firms that wish to remain competitive in the dynamic global marketplace.

However, as an accounting professional, I found the book overly critical of the accounting profession, although it does at times accurately reflect the profession's lack of enthusiasm for dealing with difficult measurement issues.

The authors use Alvin Toeffler's term, "the third wave" to describe the change currently taking place in the economy which some have called the Digital Revolution and others the Information Age. The first two waves were the Agricultural and the Industrial, both of which radically changed the way we worked and lived. In the Information Age most products have become little more than packaged knowledge and technology plays a pivotal role by storing and distributing knowledge to the employees who need it. The change to the Information Age has raised significant issues for management. Jeremy and Tony Hope have addressed the ten most vital issues facing managers in the third wave.

1. Strategy: Adopt strategic planning, a continuous process of planning carried out at all levels of the corporation. Focus on the core competencies of your company.
2. Customer Value: Match your core competencies to the right customers. Build your operating model around which customers you can best serve.
3. Knowledge Management: Harness knowledge contained at all levels of the organization and find ways to make it move through the organization quickly.
4. Business Organization: Organize the business around networks and processes, not hierarchies of power. Disperse authority to those who can make things happen.
5. Market Focus: Focus on the most profitable customers, and try hard to keep them.
6. Management Accounting: Use accounting techniques like activity-based costing or target costing that allow you to identify opportunities for improvement.
7. Measurement and Control: Keep managers moving toward strategic goals, not strict budgetary targets.
8. Shareholder Value: Find ways to measure the value of the company's intellectual assets, not just its book value.
9. Productivity: Increasing productivity depends on increasing the quality of your work force. Use training and incentives to increase quality.
10. Transformation: Encourage changes in culture, management style and employee attitudes to totally reengineer your business model.

Draws into focus the dynamic marketplace of the information age, and critical changes in focus and strategy that must occur for a business to thrive in the new economy.

Even though the authors bash the accounting profession improperly in places, they make a good case that managerial accounting must change or become irrelevant.

Highly recommended for individuals that wish to be current on management principles of the information age. Very readable, and informative.